GetGoing introduces the surprise element to air ticket bookings

Opaque search, blind bookings – models which have found their way in to the travel lexicon in recent years, not least from the likes of Priceline with its Name Your Own Price system.

GetGoing, a San Francisco-based startup which is about to draw the curtains back on its product after featuring in the YCombinator programme over the summer of 2012, aims to capitalise on such trends with its own take:

The service asks consumers to pick two flights to two different destinations that they might be interested in (eg. someone who wants to go to Europe from New York, selecting London and Paris as two alternatives). Users see and control the details of the flight, including arrival and departure times, flight duration, and the number of stops.

As soon as the customer identifies the two flight itineraries and commits to purchase, GetGoing books the ticket and reveals the selected destination.

The process, GetGoing says, allows it to exclude travellers needing to get to a particular city (nearly all travellers out there today), while “providing incremental revenue to suppliers by offering discounts to a segment of the market that is the most price sensitive”.

The site claims:

“Our approach does not try to alter existing consumer behavior: it is already a natural tendency to price-compare across multiple city pairs when looking to spend the truly discretionary dollars. Thus, we simply created a product that helps the suppliers to sell more seats and allows the consumers to travel more often.”

The company has some high profile backing in the form of an undisclosed amount from Lightbank (venture capital firm from the founders of Groupon) and Yuri Milner/DST (an investor in Facebook, Zynga, Linkedin, Twitter, Groupon, and Airbnb), as well as additional capital from its original, unnamed seed investors.

It has three co-founders, Alek Vernitsky (CEO), Ilya Gluhovsky (CTO) and Alek Strygin (COO), alongside Eli Rosenberg (head of product) and Alexey Rostapshov (VP of strategic partnerships), with a further 15 people on the team.

During the beta phase for the site, users will not be charged a fee for their reservations, but this will eventually be the primary revenue model.

GetGoing says it wants to dispel “conventional wisdom” that there are no margins in selling air tickets if a product comes along that “benefits both airlines and customers alike”.

Q&A with CEO Alek Vernitsky:

How is the way you are solving this problem more special or effective than previous attempts you or the market has seen before and how different do you have to be to succeed?

The ability to differentiate between business and leisure travellers is an important issue in airline revenue management. Traditionally, airlines make most of their profit from business travellers, with entire teams dedicated to forecasting demand for full-fare business travel and holding seats for these passengers.

Once business demand for a flight is determined, the rest of the seats can be discounted to significantly more price-sensitive leisure travellers. The difficult issue is determining when someone is travelling for business versus pleasure.

With technology making pricing more transparent to the consumer, it has become progressively more difficult to price discriminate.

The traditional indicators – Saturday night stay, advance purchase restrictions, channel discrimination – are less accurate in the world of unmanaged business travel and metasearch engines.

The efficacy of opaque models, such as Priceline’s NYOP, which requires a consumer to bid on travel and find out exact times of the flights after the booking, has also been questioned.

Not only is the model inconvenient for consumers, who can’t control the details of their flight, but the unmanaged business travellers are effectively able to take advantage of the discounts, cannibalizing revenue.

Our model is a fantastic addition to the other sophisticated revenue management tools that airlines have in their disposal. Obviously, there is a tremendous benefit to the consumer from not hiding the characteristics of the flight (eg., duration, the number of stops, arrival and departure times).

Combined with cheaper airfare, we are able to reach a wide segment of consumers that currently direct their discretionary income towards a “staycation” or trips by car, train, or boat.

We also constructed a fence that guarantees that business travellers (as well as VFR and most existing leisure) are not taking advantage of the discount fares – the sole element of the itinerary on which a business traveller is not flexible is the ability to reach a specific destination, which is precisely what our model prevents.

Why should people or companies use your startup?

From a consumer standpoint, there are several important benefits. First, we offer great deals on airfare. We negotiate these deals directly with the airlines, and the reason we are able to offer cheaper fares is because of the benefits we provide to our airline partners.

We have an absolutely awesome search-and-discovery mechanism. A consumer can find the best deals to Europe, Asia, skiing, or the beach quickly and easily – there is no need to plug in multiple airports to find an affordable flight.

We also do not ask consumers to change their behavior in order to get a discount – many studies have shown that price-sensitive consumers are already searching and considering multiple destinations before choosing one (e.g., PhoCusWright’s The Future of Travel Search, February 2012).

Nor are we a flash sale site, where a deal can be available one minute but not the next – we provide a consistent shopping experience and results that are relevant to a particular traveller.

For airlines, we are building a perfect complement to their existing distribution channels. First, our model effectively guarantees that any discounted airfare sold via GetGoing does not make its way to the majority of existing customers – someone who should pay the full price to travel to a specific destination.

Every other way of discounting the airlines currently have – including the limited Twitter sales – potentially cannibalizes the high-paying premium segment.

Second, our model allows the airlines that have lower load factors to secondary vacation destinations to effectively promote these destinations to consumers who otherwise would not have thought of searching for them.

For instance, a consumer thinking of a Europe vacation from New York may only search London, Paris or Madrid, and will fail to discover a cheap flight to Berlin, Zurich, or Milan. We effectively get consumers to consider alternatives, helping airlines promote secondary destinations or new routes.

Other than going viral and receiving mountains of positive PR, what is the strategy for raising awareness and getting customers/users?

We’ve discovered that our unusual model makes for a good conversation – we’ve built an active community on Facebook within weeks! So far, we put all of our energy into listening carefully to the initial feedback and developing a product that works really well for consumers.

In the meantime, we are raising a large investment round to support an integrated consumer marketing campaign in North America for starters, and we are building out the in-house marketing and PR team. We have some thoughts on how to tackle consumer acquisition that we are not prepared to share just yet.

What other options have you considered for the business and the team if the original vision fails?

All of us here are passionate about travel, and all of our ideas revolve around travel. The founders really enjoy sailing, and San Francisco is a perfect place for that.

So, if everything else fails, we are opening a yacht club!

What mistakes have you made in the past in business and how have you learned from them?

Our biggest strategic mistake to date was failing to anticipate the hiring needs and foresee the lead time for finding the right people to join the company.

This has probably resulted in a couple of months of delays. We have corrected this by dedicating a portion of our weekly schedule to interview people for positions that may open up in the future, even if we are not ready to hire them right now.

What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?

Travel is a platform business, where companies like ours connect suppliers with consumers. What’s unique about travel is that a lot of companies fail to serve both sides of the equation fairly and focus on buyers at the expense of the suppliers.

We think this is short-sighted. We try to focus on long-term relationships at the expense of short-term gains. We believe that to build a solid business foundation, a platform company needs to deliver well-articulated value to both parties, and we work really hard to do just that.

Tnooz view:

On the one hand the GetGoing model and idea sounds rather complicated, but then again many in the industry often scratch their heads over anything to do with opaque or blind bookings.

Clearly GetGoing has managed to convince a healthy array of backers that there is something in its strategy and the usual questions for any consumer-facing startup about customer acquisition appear to have been addressed.

Whether its funding should be (or will have to be) used primarily for marketing is one of the perennial questions for travel startups given the black hole that hundreds of thousands of dollars often find themselves being poured into.

But GetGoing will obviously need, well, get going quickly with some traction and secure loyal users (and the subsequent word of mouth) and out of beta mode to start earning revenue.

Similar to HotelTonight a few years back, which seemingly created an entirely new model out of nothing, there is a chance that GetGoing may have struck on something with huge potential here.

While the background to the idea is sound (airlines fly 70 million empty seats every year), the biggest question with the opaque model is always around risk and potential market size – are there enough consumers around willing to take that jump into a blind booking or, indeed, actively searching for product in that way in the first place.

Kevin is senior editor and a co-founder at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.

He has worked in regional newspapers (Essex Enquirer) and started his career at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and publishes his first book - a biography about Depeche Mode - in late-2016.

Comments

I always thought one of the cleverest thing lastminute.com did, amid the hype, was get Virgin Atlantic along as an early adopter. Folks went to book blind and were pleased to find they were not on Dufftastic Air but Virgin. Virgin saw lm.com as a genuinely new distribution channel. I wonder if other carriers will look at these chaps the same way….

“Once business demand for a flight is determined, the rest of the seats can be discounted to significantly more price-sensitive leisure travellers. The difficult issue is determining when someone is travelling for business versus pleasure.”

What total rot. I just issued a load of tickets to Paris for £25 a pop for a load of business types. The (airline) system works on: 1. Stick a reasonable amount of seats in each class, 2. Wait and see who books what and then 3. Drop cheaper booking classes/ open up booking classes, in real time, according to how demand develops.

If you are business or leisure is wholly immaterial. In any event, in Europe (and most other bits of the planet, short haul) , there is no such thing as “business class”. There are those that need a flexible, refundable ticket which, as the ticket costs a lot of money, airlines choose to sit in seats near the front and give them a fancy name and some extra benefits – but distinguishing twixt business travelers and leisure in this way is wholly misguided. A lot of techys cannot grasp that what you pay extra for, is the ability to change and/ or refund a ticket – the more flexibility you require, the more you pay. Then, the matter of the rest is simply down to an airline adjusting pricing to fit demand.

There is a difference long-haul, of course, where part of the cost is for the bigger seat/ bed/ privacy, etc but the principle is the same.

This is, basically: “I have $x to spend on going somewhere, what can you suggest?” which in itself is not a bad idea. Thing is, an agent (say) would look at a whole range of options, based on his or her experience and after having found out the likes and dislikes of the client and not just a couple of limited options which the client (who invariably does not know what they would like) has to decide on in the first place.

Murray, thank you for the comment. We wholeheartedly agree that brick-n-mortar travel agencies have an important role to play in the travel ecosystem. Your example is also a great illustration of the benefits of our model: our airline partners would like to avoid a situation where “business types” are buying “a load of tickets to Paris for £25 a pop.” Presumably your customers would have paid more to fly to Paris for a business meeting, and the airline ended up losing money on these tickets. Our model allows the airlines to maintain a higher published rate and offer discounts selectively to someone who is guaranteed to be going on vacation and is more price sensitive. Please check out our website at http://www.getgoing.com to see how it works.

You really must get this flawed notion out of your head that there are business travelers and leisure travelers as, somehow, two distinct groupings. There are people who require flexible and/or refundable tickets and those that can accept heavier restrictions. There are people who can book and plan well in good time and those that have to travel at the last moment. This may be a business traveler who has a known event well in the future and gets a cheap seat or a leisure traveler whose Great Aunt has just fallen off her perch and so has to travel tomorrow – ‘planes are full and so has to pay an arm and a leg. Long haul, that may be coupled with those that wish to pay for extended comfort. Followed to a logical conclusion, in your concept, airlines would quiz passengers as to their reasons for travel.

The airlines do not lose money because a business traveler has a planned event and so books well in advance. It simply does not work like that. The whole airline pricing thing is based on (quite sophisticated) real time analysis of bookings on any given flight and adjust, again in real time, the quantity of seats available at each fare level. In other words, airlines play a bit of a cat and mouse game with Jo Public. Demand goes up, prices go up, demand falls, prices fall – it is about the purest form of the concept of supply and demand on the planet. When a world cup was on, some years ago, a return ticket on a low cost carrier from London to Frankfurt on a junk fare airline was pushing £600. I have seen a flight go from Y class only to all classes to Y class and back again, in the space of less than an hour.

With respect, this concept is built on totally flawed thinking of how things actually work. (Not to mention that many corporate clients have their own fares as do many larger agents, who can offer much better travel options for the un-managed biz travel element – or indeed, the leisure traveler – but that is another story)

Now, as mentioned, you only come up with, in effect two options. Unless you incorporate a healthy portion of yet-to-be-designed semantics, you are in grave danger of suggesting two places which may have (momentary) cheap fares, but are wholly unsuited to the aspirations of the client. To put it another way, the client would be much better off visiting a travel agent. (Unless the person is a back-packing, globetrotter with a “where I lay my hat, that’s my home” philosophy and frankly, that market is has been well and truly thrashed)

What you have, here, is something that falls between (too) many stones, based on a rather tenuous grasp of how things work.

Ish

Actually I’ve tried the site and it does fit a pretty good need. Murray I think you probably should use the product before you judge so harshly. There have been many times where I say I just want to go on a beach vacation. I might be ok with Miami or Hawaii as both are places I enjoy going to. I checked GetGoing versus Kayak prices and GetGoing prices are much cheaper for the same dates. Therefore if as a consumer I don’t care which destination I go to, voila they have saved me a great deal of money.

Also if GetGoing’s theories were so wrong how would they have gotten the airlines to agree on these special rates. Sounds to me, Murray, like you are the one missing something.

I am not affiliated with GetGoing in any way shape or form but I do think its a worthy startup concept and I hope to give it a shot sometime.

Seriously? An air booking engine that helps me book the cheapest flight if I’m flexible on destination? This idea was funded? Sorry guys, but I’m having trouble with this concept… maybe I’m just not getting it from this article, or maybe I’m not reading the data in the same way. I don’t think it’s that consumers are open to multiple destinations when they are doing their booking, but open to multiple destinations when they are doing their search/shopping. Very different…

personally i also would not want to make an opaque booking to a destination solely based on pricing but i have a number of friends who would compare this price against their own price research – i guess there is a market out there if they will truly offer deals.

Bruce,
I agree with you this seems like a thin ice bet. One one hand I am very positive about the concept of opaque fares for last minute bookings, and I think there is an opportunity for matchmaking.
However, I think “flight only” is a tough product. I get tickets for Paris or London, but then what? I need to actually arrange everything else around it. it’s very different than booking an opaque hotel in a city I have already chosen (and I already have cheap tickets for). If the two models gets matched up to build opaque surprise getaways, I see hope.
Daniele

Danielle, excellent comment – something that our early users have already asked for repeatedly, and something that we also anticipated. We are working on the hotel piece, and will start doing packages in a couple of months.

Danielle, I had a similar thought re: packaging the hotel + air, as the lodging is often the more costly component over the duration of the trip. If I’m a very cost-conscious traveler, I wouldn’t leave the largest variable out of my equation.

Bruce, great comment – people often reach the same conclusion. I think the logic is that since existing websites require us to provide one specific destination at the time of booking, that’s what consumers prefer. At the same time, I think you correctly acknowledge that leisure travelers may be considering multiple destinations when they start their vacation planning. Everyone must have decided, at some point, between Florida and California, Caribbean or Cabo, Rome or Paris, you get the idea. Consumers then had to use their own selection criteria (price, itinerary, etc.) to narrow down to one choice, in order to be able to book on existing booking sites. With GetGoing, consumers don’t need to narrow down their choice to 1 destination. They can narrow it down to 2 (something that’s as natural as then selecting 1 of 2), and be rewarded for doing that!